DAL - Delta Airlines - Who Will Own The SkiesA lot of Buzz around the airline industry since the bailout this week, so we're taking a look at Delta ($DAL), along with every other person who just downloaded their Robin Hood account this month. Hearing a lot of the "airlines are so cheap, airlines can't fail, people aren't going to stop flying" comments.
Correct, people will not stop flying, just depends on who owns the plane. Airlines can most definitely fail. American Airlines is still fresh off Bankruptcy that occurred in this decade!! Airline operating costs and gas do not come cheap. Why do you think you're paying $4 for a bag of potato chips.
Fundamentals:
1. Buffet just dumped $314 million worth of Delta shares alone this month
2. Delta just accepted the Stimulus $ in which they can use to stop the bleeding, but they can't lay off any employees (around 90,000 of them) at least until September. They're burning around $60 million per day, so they expect that money to be gone by around June unless they get more $ or people start flying
3. DAL had around 600,000 passengers on a given day in March, they're now around 38,000.
Technical:
We see price consolidation and price seems to have found support around $20-$22 range. Usually this is a continuation pattern forming, which leads to more downside.
If you're going to play this, this is a complete gamble at the moment. Would only buy to go in and out quikc trades. We're not long on airlines until we start seeing people book vacations and businesses stop using Zoom instead of traveling for work.
Go tight with the stop loss, as any breaking news can push the stock either way.
If we play it, target buy at $21.50-$22.00 with a stop loss at $20.00. Target #1 at $28.78, Target #2 at $34.82.
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